Hong Kong, 21 March 2019
The Council of the European Union adopted a revised EU list of non-cooperative jurisdictions for tax purposes on 12 March 2019. The list was initially set up in December 2017 to promote good governance in taxation worldwide with an aim to contribute to efforts on prevention of tax avoidance and tax fraud. Partially updates on several occasions have been made thereafter.
The EU had put 68 tax jurisdictions including Hong Kong on the watchlist in 2017 and 2018. After being monitored by the EU on the progress in implementing the requirements of international tax co-operation, Hong Kong has now been removed from the watchlist in the revised EU list.
The tax initiatives recently implemented by Hong Kong include the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which entered into force on 1 September 2018 to allow Hong Kong to effectively implement the automatic exchange of financial account information in tax matters (AEOI) and the Base Erosion and Profit Shifting package promulgated by the Organisation for Economic Co-operation and Development. The first exchanges under the AEOI with the relevant jurisdictions were conducted in September and October 2018.
Hong Kong has also passed the Inland Revenue (Amendment) (No. 6) Bill 2017 and the Inland Revenue (Profits Tax Exemption for Funds) (Amendment) Bill 2018 in July 2018 and February 2019 respectively to amend the tax regimes in respect of corporate treasury centres, professional reinsurance, captive insurance, offshore funds and offshore private equity funds by extending the coverage of the relevant tax concessions from non-domestic transactions to domestic transactions so as to comply with international requirements.
The Hong Kong Special Administrative Region Government welcomed the decision of the EU to remove Hong Kong from its watchlist on tax co-operation in recognition of the efforts made by Hong Kong on the international tax co-operation front. The Secretary for Financial Services and the Treasury, Mr James Lau, said, “As an international financial centre, Hong Kong has all along proactively supported and facilitated the efforts of the international community in enhancing tax transparency and combating cross-border tax evasion. Since 2018, Hong Kong has implemented various initiatives relating to international tax co-operation and fulfilled the commitments made to the EU. The latest decision of the EU shows that Hong Kong’s compliance with the standards of international tax co-operation is recognised by the international community.”
For more information, please contact:
Dottore Commercialista, LL.M.
Tel: (852) 3102 1995
Senior Tax Manager
Tel: (852) 3102 1995
Rooms 501-2, Wilson House,
19-27 Wyndham Street,
Central, Hong Kong